Quick Overview

  • Oracle is expanding token-based and outcome-based pricing models to explore new ways customers pay for AI capabilities, CEO Mike Sicilia said on Wednesday.
  • The company is among many software vendors rethinking pricing strategies as AI disrupts traditional billing structures. Token-based pricing charges based on AI usage, while outcome-based models tie prices to the results produced by the technology.
  • "All of this helps our customers control costs and align spending with the value generated," Sicilia said during the fiscal 2026 fourth-quarter earnings call.

Deep Insights

These changes reflect a broader trend in enterprise software moving toward hybrid pricing structures, as vendors try to commercialize AI capabilities that do not fit traditional per-seat licensing models.

According to a report released in January by SaaS management company Zylo, AI and usage-based pricing are increasing volatility in enterprise software spending, with organizations reporting unexpected charges as vendors layer consumption-based fees on top of subscription contracts.

The study found that new pricing mechanisms and AI feature monetization have become major drivers of rising SaaS costs, surpassing the impact of application sprawl.

Sicilia said Oracle has begun a "limited rollout" of token packages, allowing customers to purchase additional agentic AI capacity across its application suite in a "simple, predictable way."

He revealed that 33 customers this quarter, including Aon Services Corporation and Liberty Energy, pre-purchased token packages.

"We are simplifying how customers consume and pay for agentic capabilities," Sicilia said. "Our new agentic pricing aligns with customer value."

The pricing update comes as Oracle reported strong fourth-quarter results for the period ending May 31, driven by growth in its cloud infrastructure and applications businesses. Total revenue rose 21% year-over-year to $19.2 billion in the quarter, with cloud revenue up 47% to $9.9 billion.

Chief Financial Officer Hilary Maxson said the company's gross margins in fiscal 2027 will narrow due to accelerated construction of data center projects.

"While these investments pressure infrastructure gross margins in the near term, we expect infrastructure margin performance to improve rapidly as data centers reach contracted full revenue levels," she said on the earnings call.